Rethinking everything – Part 3

Something that is incredibly surreal about New York that often goes unnoticed is the wealth disparity is constantly on display. We ignore it, we purposefully ignore it, because it’s just depressing. I walk through the wealthiest area of the city every single day. All those stores you tourists come to see and block the sidewalks so I’m late getting to the D Train, yeah, I see those every day.

What I also see is multi-millionaires shopping for watches that cost $50,000 while a homeless guy with obvious mental issues and in need of help sits outside in 18-degree temperatures. I watch as people spend thousands of dollars on shit they don’t need while the person behind the counter struggles to pay rent.

The disparity isn’t unique to New York, but it’s certainly absurdly visible. Take a subway within Midtown before or after a holiday during typical rush hour periods and it’s empty. Take that train from the Bronx into Manhattan and the train will still be crowded with people on their way to work. Why? Because the people in the Bronx mostly work service jobs, jobs that exist to serve the people in Manhattan, the people who get that time off to do whatever. And service jobs need to exist, but when you see young and old, husbands and wives, fathers and mothers all filling these jobs and not moving up the economic ladder, there’s something wrong with that picture.

The issue isn’t that we need to tweak the system or increase minimum wage or continue enacting policies that were fantastic ideas 50-60 years ago. We don’t need some Bolshevik-style revolution, rehashing and utilizing some philosophy from 100 years ago. Just as we don’t need some rehashed socialism, we don’t need to keep rehashing capitalism as though it’s some sacred cow, the arbiter of all economics and that without it we cannot exist. It’s an economic model based on Enlightenment thinking, a way of thinking that (thankfully) has slowly been fading out of our existence. So why are we still using it?

Basically, we need to rethink capitalism, we need to rethink our economy. With the rise of automation, jobs that were previously “skilled” are now “unskilled,” which has caused some to migrate over to other “skilled” positions (such as sales), driving down wages and creating a perpetual downward spiral in our economy. I know, I know, “But muh investments!” Or whatever argument you want to make. At the end of the day, the system is failing and has been failing for over 30 years. It cannot be saved, it cannot be salvaged, but it can be reformed and remade. There are some good things in capitalism that we can continue using, but overall we must use those things as tools and not as centerpieces in any new system.

Consider that we wouldn’t allow the government be run by an elite group of people who openly select a dictator for us, and then have that dictator openly admit to serving the board and not serving us. We wouldn’t allow the government to limit what we could say or do and dictate how we should live our lives the majority of the time we’re awake. I mean, we’ve basically allowed all of the above, but in theory, we wouldn’t allow it. We still have the pretense of voting and, if we honestly got serious we could overpower those that seek to influence our government. We still have a mechanism to change.

But we allow our corporations and bosses to do the above to us all the time and we think nothing of it. What is a CEO if not a dictator? What is a board of directors if not an oligarchy? We don’t like to think about these things, but they’re still true; as much as we claim to value freedom, the fact is we’re very much in favor of totalitarianism so long as it’s privatized. At its core that is the problem with capitalism, is that it took the absolutism of monarchy that existed prior to the Enlightenment experiment and instead placed that absolutism in the hands of individuals so that when one has capital producing property, one has absolute rule over that property. By necessity, those tied to the property through labor would also fall under that absolute rule.

The answer, then, is to take away the absolutism of the boardroom. Yes, it’s private property and all that, but it exists within a social sphere and the larger its influence, the larger its impact, the less “private” it really is. A company dumping toxic waste into part of a lake it owns would still be held accountable for its actions on its own private property because its actions had public ramifications. Only the most anarchist of capitalists would disagree that private companies that harm public interests ought to be punished. There’s almost universal agreement that harming public good (physically) should require the government to step in and stop it. Why, then, do we not have the same view when a corporation – or group of corporations – are harming the economic public good through selfish and greedy business practices? If we think it’s okay to stop a business from harming the public good when it comes to health, why not when it comes to the economy and the lives of others?

Thus, the idea of “private property” is a misnomer in today’s world. Yes, the lower the impact a business has, the more private it is. But the more visible and the bigger impact it is, it really ceases to be private. As such, the government is fully entitled to step in and regulate the absolute shit out of it if it’s harming the general populace or our economic output (in terms of the real economy; the market doesn’t matter). Since the central problem of our economic problem is dictatorial boardrooms, we ought to do what we can to eliminate their power. If that comes through legislation, so what? I think there are two ways – not mutually exclusive, but also not reliant upon each other – that we could remove the influence of boardrooms and stop the damage they’re causing to our economy:

First, we need to enforce a strict ratio tax on large corporations – as mom and pop stores aren’t really a threat to our economy (they can still be horribly run and mistreat employees, but they don’t have a major impact on the economy). What that means is simply don’t allow corporations to compensate (this includes stock options, cash bonuses, and salary) their highest-earning executives at more than 50:1 the average employee. While there’s no absolute number for what ratio is ideal, most economists agree that an income ratio of 100:1 is the highest you can go before you begin to see negative ramifications in the economy. Once the wealth gets to 150:1 or even 200:1, the income gap is wide enough to start putting a strain on the middle class. Right now we’re at 271:1 as an average, though some companies are obscenely higher.

Why does this cause a problem? Well, consider that since 1978 CEO pay has increased nearly 1,000%, which far outpaces the market (the S&P 500 has “only” increased 542.9%) and even the wages of the traditional 0.1% (which has increased 320.5%). In terms of actual dollars, not adjusting for inflation, the average individual income for Americans has increased 195% since 1978. However, keep in mind that $10,500 (the average annual individual income) in 1978 is equivalent to $39,415 in 2017, so with inflation modern workers are either breaking even or at a loss compared to the 70s. The reason for this is simple: if profits from actual production and investments haven’t increased as much as CEO pay has increased, it means the money for the CEOs had to come from somewhere. That somewhere is the workers. The income inequality at 271:1 means that worker pay must be cut and/or restricted in order to pay for the CEO and other executives. Since the pie can only be so big, corporations are cutting bigger and bigger pieces for the CEOs and executives and giving crumbs to their workers. This is why we’re having food drives for people because their low pay means they can’t even afford to eat an adequate meal.

Hence why income inequality must be addressed. It’s one thing if one company inflates the gap, but it’s another when it’s the common practice for all corporations in America. Placing a hard cap of 100:1 and slowly bringing it down to 25:1 (what it was in the 1950s and 60s, which created a strong and stable – apologies to Theresa May and all Brits who hate hearing that phrase now – middle class) ratio over the course of 10 years. This lessens the shock to the system but also elevates us to have a strong middle class. The boardroom still holds power, but not nearly as much. It neuters the damage they can do because they’re limited on how much they can exploit their labor.

The second thing that we should do is look at instituting worker-ownership. Admittedly, this works better as a grassroots project, but it could still be legislated to a degree. Let the workers actually own a piece of the company; if the company sees fit to give significant equity to the CEO, he should have no more than 10x what the average employee is given. After all, the company and CEO are absolutely reliant upon the labor of the worker, so why shouldn’t the worker get ownership or a profit share just like the CEO does? The implication, of course, is that if workers have part ownership in the company, they have say in who their executive board will be. If workers have complete ownership in a company, then they’d have a complete say over who the board would be and who their managers would be.

Now, we can act like that’s a bad thing, argue that workers can’t possibly know how to run a company so why let them vote on a CEO? But these are the same people we allow to vote for a person to have power to launch nuclear weapons; so we trust these people enough to vote for a person who can start WWIII, who can vote legislatures into power who will write the law, but we can’t trust them enough to know what works and what doesn’t work in their own vocation? Bollocks.

In employee-owned companies around the world, employees have actually shown that they know exactly what they’re doing in electing an executive board. Likewise, their pay ratios rarely exceed 10:1, bonuses are distributed to the worker-owners accordingly, and they don’t have food drives for their people because their people can actually afford to eat. What a shocking concept!

Those are admittedly brief, but broad enough to hopefully encourage some thinking. What is known is we can’t continue on this way. Our system is absolutely unsustainable and is headed toward a collapse from which it’ll be difficult to recover. The crashes since the 1980s have proven to be shocking to the system that we’ve yet to recover from, and it’s shaping our politics and our nation.

What is known is that if a company has to hold a food drive for its own employees, then the system is not working. We can point to multiple charts showing its working, we can point to the stock market, and we can perform amazing mathematical acrobatics to prove that the economy is actually doing well. And I will still point to the 14% of the population – the nearly 50,000,000 people – who are food insecure, I will point to the fact that 49% of our nation is low income, and I will point to companies having food drives for their own people and show that the system is absolutely broken.

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Why people go hungry in America, but still, meh – Part 2

If we produce enough food to feed everyone in the US, even after our waste, why do we have such an issue with food insecurity? Why are the Republicans looking at cutting welfare programs that keep people fed, cuts that will likely harm the most vulnerable of our society (the elderly and children)? Is it because their [Republicans] mothers didn’t love them as kids? Did their fathers abuse them? Do they just hate poor people and view them as less human? The answer to all of those question is “probably,” but it ignores the core of the problem.

The problem is capitalism. I know, shocking. Capitalism is the boogeyman that comes to devour children late at night, is the cause of all the world’s problems, and without it we’d all be living better lives and on the verge of perfection. Of course, that’s not anywhere close to the case as Capitalism is merely a transitional economic method from feudalism (or types of feudalism) to industrialization. It is not, or at least it should not, be used as a permanent economic model. Why? Well, because it’s gotten us into this shit.

Everyone thinks capitalism is nothing more than an exchange of goods for a price that creates a profit for the person selling. While that is a part of capitalism, to reduce capitalism to such a simplistic definition is just idiotic. Under that definition, literally every system of economics out there has been capitalist, including the Soviet Union where vendors could still sell good for a profit.

A better understanding of capitalism is that it’ll have a few characteristics to it, such as the privatization of labor’s profits, ownership of capital producing private property, the dissuading of collective or family ownership (e.g. it’s more efficient for the capitalist to own one mega-farm than to buy from thousands of family farms; and the capital is privatized, not shared among the workers), maximizing profit in all situations, an increase of wage employment (rather than individual ownership), and having a certain segment of the population existing as spare labor.

While we could nuance the shit out of the above, those are some very broad characteristics of the various capitalist systems in existence. As it is, capitalism isn’t inherently bad or wrong. If you apply the above to a nation transitioning from an oppressive economic system that just doesn’t function, then the nation is going to be better off. All the memes and statistics showing that capitalism has helped decrease poverty around the world are mostly true; anyone with a proper understanding of Marx’s critique of capitalism would have no problem agreeing to these facts. That doesn’t mean, however, that capitalism is preferable for advanced economies, or even good for advanced economies. A kid who is child training might go from diapers to pull ups (kind of underwear, kind of diapers), but they don’t remain in them forever because they have to transition on to something better, otherwise they’re an adult who still from time to time shits their pants. In this scenario, capitalism is the adult that shits its pants from time to time.

Of all the characteristics I listed, all of them in some way contribute to the issue of food insecurity in the US, however the last one – having a certain segment of the population existing as spare labor – is without a doubt the leading cause of food insecurity. In the 1950s and 60s, the theory of having a surplus labor pool was great (if you were white…we won’t go down that path for now). Part of the reason the US did so well economically is that they produced things, and because Europe had been basically destroyed by WWII. But even prior to WWII, the US had the capacity and was outpacing Europe in terms of production.

What helped the US so much is we had a surplus labor force, a group of workers who were either unemployed or underemployed, so the moment a job or better job presented itself they could leap at it. This prevents labor shortages, which can lead to inflated wages, which can lead to overpriced goods, which can lower demand and, ironically enough, lead to layoffs. So from the 1940s all the way to the 1970s, the US had this small segment of people – typically under the age of 25 – who were underemployed or unemployed who could be called up the moment someone retired or there was a demand for more labor. The wages for the new jobs had to be higher than minimum wage and the benefits had to be better in order to entice people to take those new jobs.

It’s why we see many “progressive” economists focusing so much attention on the minimum wage. The theory is that if the minimum wage is increased for the “reserve labor force,” the wage for those working in “real jobs” will also increase so as to entice those minimum wage workers to jump on board if there’s ever a labor shortage. And in a society that produces things, this theory actually does work.

However, our economy has transitioned from the era of producing things, but our economic theories are still running off early 20th century thinking. The problem is the above theory doesn’t work in today’s economy for a few reasons:

1)      Most of our growing economy isn’t based on production in the traditional sense, but instead is based on financing (moving money around).

2)      Due to automation and an increase of efficiency, we don’t need as many workers as we did before, so our reserve labor force typically represents almost half the labor force.

This is why so many economists are baffled that even though unemployment is down, wages haven’t gone up. Typically, the more people you have employed, the more competitive it becomes for wages. In today’s economy that’s not the case because the people employed don’t really need to be employed. Why else would half the nation be classified as low income? If production is at an all-time high and corporate profits are at an all-time high, why aren’t people getting raises? The answer is because there’s so much of a surplus of unemployed/underemployed labor, there’s no need to raise wages. If 50% of your workforce would jump at even a $1 per hour raise, those currently in those positions simply won’t quit because “they’re grateful to have a job.” They’re less likely to push for a higher wage when there are 10 people in that reserve labor pool who would happily take the job for fewer dollars. And so because there’s so much reserve labor, there’s no need to increase wages; but corporate profits keep increasing.

It’s why tax cuts for businesses, while not necessarily bad, won’t find their way to employee’s pockets without regulation. Most corporations don’t need to reinvest money for production or labor; rather they reinvest in their own stock or some other company’s stock. That money goes into the market and the excesses remain in the market. The majority isn’t turned into tangible goods. In a perfect world, businesses would reinvest in their labor force to make them more productive, to motivate them, and to attract employees from other companies; in our world because wages are so low (lowest per capita since before the Great Depression) there’s simply no need to increase salaries because, honestly, where else are the workers going to go?

Thus, it’s a bit hypocritical for these major corporations to hold food drives for those in need when they’re the single biggest cause for food drives. Wages should be high enough and government protections should be in place so that there’s no need to worry about where your next meal will come from. No, not everyone should have that new TV or new computer. Not everyone needs a Mercedes. And not everyone needs a rack of lamb with Russian caviar (gross). But shouldn’t everyone in the wealthiest nation the world has ever known at least have a meal?

I’d argue that yes, yes they should. People shouldn’t have to worry about where their next meal is coming from. Part of this is we have to rethink how the economy works. Right now, wages are based on two things: the value the person brings and the market price of the labor. The market price for a welder might only be $20 an hour, but on certain projects his value could cause that price to go up. This is why individual contractors often charge different clients different rates, because the value they bring to that individual client might be more or less than the value to another client.  Under wage theory, the value is an estimate while the market value of the labor is almost constant. A lawyer who helps low-income residents in the city and a lawyer who helps the corporations fuck over the low-income residents of the city will work about the same hours. So the labor is equal. The value, however (and the ability to pay for that value), is drastically different. The lawyer helping average people generates no value for the company and therefore they won’t get paid. The lawyer helping the company, however, generates value and is therefore paid for his value.

This is why we have the divide between skilled and unskilled labor. A person cleaning a department store might work 10 hours a day on her feet whereas an executive manager at an investment firm will work the same amount of hours. However, the value each brings is different. The janitor has a job that (in theory) almost anyone coulddo (but won’t always do), whereas the executive manager has a job that (in theory) few could do. A specialized skill always brings more value and therefore always pays more.

In today’s economy, however, this model is broken because it’s undermining our economy. At the end of the day if an economic model brings your society closer to an economic collapse, then you should probably change that model. Both the value theory of labor and having a reserve labor force in a modernized, semi-automated economy works to crash the economy. If the majority of people lose the ability to purchase things, then capital ceases being put into the economy and eventually the economy comes to a halt.

We’re at the beginning stages, I’d argue, of a long term or even permanent stagnation. That we have food drives around Christmas to help almost 1 out of 5 citizens is nuts. We’re starting to witness the collapse of our economy to a point where it can’t be recovered without some tears and agony, or guillotines.

People go hungry in America, but meh – Part 1

I witnessed something extraordinary the other day; during a Christmas food drive, after closing hours (I happened to be that guy who was there after the place closed, but I was waiting in line for to pay, so I guess I’m justified? No, I’m still an asshole), I watched as a manager went over to where food had been collected for people in need. Very discretely he began taking the canned food and boxed cereals out of the box, putting it into a bag, and having some employees go over. There he distributed the food to the employees, many of whom were middle aged and not the typical teenage retail employees.

Now, maybe this was all an elaborate scam to get free food for the holidays. Maybe they’ve figured out a way to game the system. Or, it could be that things are just that bad. Not even 5 years ago, Walmart had egg on its face when it held a food drive for its own employees, begging the question that if you have to get food donated for your employees, shouldn’t that be a sign that you’re not paying enough? Of course, no one stops to ask that question.

Yet, there’s another question that’s important to ask: Why do we have charity during the holidays? Granted, no one in the modern industrialized world gives more than Americans (hey, we are #1 at a few things at least, right?), but that’s because no one in the industrialized world needs to give more than Americans. The idea of having a “food drive” is a foreign concept in some contemporary nations because food security isn’t an issue. Even the poor in Norway don’t have to worry about going to sleep without having a proper meal, but in the United States that’s an everyday worry. In fact, 12.3% of US households (not population, households) will experience food insecurity at some point throughout the year. With an average of 2.5 people per household (125 million households compared to 323 million people), that means approximately 45,295,200  men, women, and children are food insecure at any given moment throughout the year. That’s 14% of the US population.

It gets even more depressing when you break it down by state and county. Within the US some states, such as Mississippi, sit at a statewide average of 18%, with some counties exceeding 30%. Take Jefferson County, Mississippi, that sits at a food insecurity rate of 38% and over 70% qualifying for the SNAP program (meaning they’re below 130% of the poverty line). And it’s not just the South; Wayne County, Michigan has a food insecurity rate in excess of 20% and a whopping 85% of its residents qualify for SNAP.

But wait, there’s more!

If you look at national statistics, the national household average income is around $54,000, or about 200% of the poverty line, based on the assumption of a family of four. This makes sense considering nearly half of Americans earn less than $30,000 a year. The National Center for Children in Poverty sets the standard for “low income” at 200% of the poverty line. The reasoning behind this is that when you’re only 200% of the poverty line, you’re essentially living paycheck to paycheck. Yes, you’re not impoverished, but you can’t really save money. So if you lose your job or don’t get paid, it’s catastrophic because you likely have nothing in savings as half of Americans can’t save money. The reality, based on the previous link, is that only 19% of Americans have what we could deem a “real” savings account, that is, they could take a $1,000 hit and still have money left in savings. This also means that 50% of all children in America live near the poverty line, which of course creates massive problems in terms of health, education, and future prospects for the nation. As that study shows, having an education doesn’t really help as nearly half of all children living in poverty have a parent with a college education.

Yet, with all of this we have the Republicans –in their infinite wisdom and complete ignorance of economics, morality, and common decency – saying that in 2018 they’re going after “entitlement” programs and “welfare” programs. This after they gave the biggest hand job welfare boost to corporations and wealthy people in US history. Under the status quo we’re already looking at 14% of our population facing food insecurity and with many more on the brink of food insecurity. Making cuts to programs will only increase the number of hungry people in the US. It’s entirely plausible that cuts to SNAP and other beneficial living programs could easily see the number rise as high as 20-25% nationally.

In light of this, the United States produces enough food to feed 10 billion people. The US population is, of course, a few billion fewer than that. We produce enough food to feed people with little to no effort; we could literally give away half of the food and still not impact the profit of food production, as we waste half the food produced anyway. I’ve worked in restaurants before where we had to throw food out because we weren’t allowed to give it away or eat it as employees. How much sense does that make?

All of this leads back to the original point; we have food drives because we’re incredibly inefficient at feeding our own people. Charity work for toys, presents, clothing, and things like that can make some sense, but for food? Since when was food a “charity” item and not, you know, essential to living? What’s crazier is that this is completely artificial. We’re not in the midst of a famine, we’re not facing food shortages or export problems, and our food isn’t even overly priced when compared to other nations (such as Europe). The food insecurity in the US is completely, 100% artificial.

Here Be Giants: Breaking up CVS, Aetna, and basically the entire economy

In their best Biggie (ft. Jr. M.A.F.I.A) impression, CVS (ft. A.E.T.N.A) is doing their best “Get Money” move. By attempting to buy Aetna for $69 billion…heh….they’re trying to merge one of the largest pharmacy retailers with one of the largest healthcare insurance providers. That the purchase is for $69 billion is all too perfect because the only people getting any sort of pleasure out of this will be the executives at CVS and Aetna; everyone else is left out of this little shindig.

But this is just one more merger among many since the 1980s and 90s, when the US government decided it really didn’t care about oligopolies and de facto monopolies. If you want to look at one of the biggest reasons we’ve seen profits and production increase along with he cost of living, but wages remain stagnant, you could look to the current market structure which is almost exclusively an oligopoly in every single industry. Want to go to a pharmacy? Most likely your choices are CVS, Walgreens, or maybe RiteAid (and let’s not forget Walmart). Sure, there are local pharmacies, but they represent such a small portion of sales that they hardly count. You could also go to your local grocery store, but it’s not really “local” as it’s most likely owned by Aldi, Albertson’s, Ahold Delhaize, or Kroger (or, again, Walmart). And if you want to watch the news on your phone (which is really just down to two competitors: Samsung and Apple), you’ll likely be watching or reading the news from an organization that is owned by one of six corporations (90% of the mass media in the US is owned by just 6 corporations).

The point being, it’s difficult to think of an industry where there’s robust competition free of giant competitors. Business software? Intuit and Microsoft will likely outcompete you or buy you. Oil extraction? There’s maybe 3 or 4 major companies that can accomplish this. Car production? Of major US car producers there’s three, including real worldwide competition we’re still at less than 10. In fact, if you think of common oligopolies in the US, every major industry has one: Internet service providers (which are often monopolies in smaller regions), aluminum and steel production, airlines, mass media, pharmaceuticals, music, and the list goes on. In fast food 71% of the industry is taken up by just 12 companies, though the food industry is harder to create an oligopoly due to already low margins and that different types of food can be offered to avoid competition.

Americans are always careful with monopolies, we try not to let any one company control an entire industry at a national level (though we oddly have no issue when it’s done at the local level). However, we’ve ignored that we’ve moved into an economy where each industry faces little to no competition. While there is some competition, it’s not significant nor is it enough to effectively lower prices. Likewise, when few companies compete within an industry, you not only harm the consumers, you harm the workers. Just as consumers won’t find low prices, workers won’t find higher wages because “the market” has set wages within that industry. But if you’re skilled in media and want more pay, where are you going to go if there are only 5 other options and they pay the same? “The market” has only set that pay because those 6 companies don’t have to compete against each other to gain quality workers, so they can artificially lower the wages. Multiply this across various industries and you begin to see how our obsession with large companies in industries has forced wages to remain low; when 2-10 companies control an entire industry, representing millions of workers, the companies get to dictate the market price of labor because they control the market.

See, the above isn’t a free market. A free market requires the market to, well, be free. That means free of harmful government regulations (note the use of the word “harmful” here) BUT ALSO must also have robust competition. If an industry requires large corporations with little competition in order to function, then it means that industry ought to be heavily regulated by the government because it’s not a market industry; the market can’t self-regulate the company or companies because they are the entirety of the market. If you have 100 businesses within any given industry then the market tends to self-regulate (to an extent). There’s enough competition that people will pay higher wages to attract better workers, which gives them an edge over the competition. The higher wages means the average worker can consume more, so more money is spent within the industry, which boosts other businesses. The cycle continues. If, however, you have 5 businesses within any given industry, then the market is clogged up and doesn’t exist. Here’s an example for those who follow the NBA (and if you don’t follow the NBA, there’s something fundamentally wrong with you):

In the current state of the NBA we see oligopoly in action. While there’s an entire season and 30 NBA teams competing for a title, in reality there’s only 2 teams that could possibly win it. 5 if you press it. Golden State and the Cavaliers round out the top and are realistically the only two teams who could possibly win the championship. Of course, on the wings are Houston, Boston, and maybe the Thunder (if they figure out how to play together). Of course, Boston fans would argue that Boston has the best chance, but that’s what Boston fans do. But outside of those teams, everyone is just playing to play. They don’t have a realistic chance of winning. Now imagine if the NBA came in and rather than putting a salary cap on a team, they put an All Star cap on a team, meaning you’re limited on the number of players you can have who have been named to an All Star team over the past two seasons (I’m not saying the NBA should do this; I’d hate it as a fan of the sport). Suddenly, the NBA would become VERY competitive. There’d be no way to really predict a winner; sure, there’d still be teams that you know wouldn’t win, but the list of who could win would increase to at least 10-15 teams, or half the league.

Take that analogy and compare it to the modern American economy. What if we broke up oligopolies? What if we went into industries, saw that the market was clogged like a bad artery, and cleared it up? What if in any given industry the competition went from 5 to 50? Sure, within 2-3 years it’d dwindle down again due to some companies not being able to make it, but you could see it leveling off at a much higher level than now. What’s happening in the modern age is companies are being bought out while they’re healthy. We didn’t get here because companies were failing; we got here because companies bought out their competition. And as multiple industries have seen companies clog up the market, we’ve seen prices go up for common items and wages remain stagnant because where else are you going to go?

If you look at successful economies in Europe – not just the mythical Nordic nations, but also Germany and…uh…Germany… – one of the common themes is they’re very anti-oligopoly. In industries where large corporations are required, which stifle competition, there are heavy regulations in place and the industry must function within those regulations. Those economies are doing the opposite of what the US is doing and they’re experiencing stability rather than stagnation. In fact, the great economic boom in the US in the 1950s, 60s, and early 70s occurred because most US industries were full of competition. While come industries were still oligopolies, enough industries and therefore enough of the jobs out there had enough competition that the oligopolies in other industries still had to keep higher wages in order to compete for better workers, even if from other industries. We started moving away from that in the 80s and, well, here we are now, in one giant shithole of a real economy.

The CVS and Aetna merger is just another one that’s bad for workers and bad for consumers. It won’t solve the problem of prices, but it’ll make some executives on both sides very, very wealthy (well, wealthier). In the land of giants we need a giant killer, a modern day Teddy Roosevelt to come in and break these companies up and free up the markets in these multiple industries. Merely increasing minimum wage or increasing taxes on the wealthy won’t solve it; we have to break these companies up.

Will things ever get better? A very quick note on optimism

I pretty much have a negative outlook on life, but that’s because when your best friends in college were all books written by dudes who had pretty negative outlooks on life, you kind of adopt their style. I should also add Nietzsche was my favorite philosopher, not because I agreed with him, but because he was so absurdly absurd. So there’s that. I think this negative point of view stems from philosophy requiring you to be cynical of all claims until you can really think over what’s being claimed. In terms of looking at economics and society in general, this means I’m naturally cynical of any claims of optimism.

Sadly, however, the numbers back up my cynicism. How desperately I wish I were just Eeyore, being negative for the sake of being negative. But all statistics, all analysis shows that at the very least, life in the US is regressing. Things are getting worse. Our foreign influence is waning, the middle class is more endangered than the polar bear, and thus far we haven’t seen any major legislative moves to try and prevent these things from happening; if anything, all legislation up to this point has merely maintained the status quo or made it worse.

That being said…

The majority of people under the age of 30 (about 55%) have a mostly favorable view of socialism, whereas about 57% of the same group holds a similar view of capitalism. It doesn’t take a genius to figure out why people under the age of 30 (really under the age of 40) hold a favorable view of socialism; it’s because pure capitalism hasn’t worked. It’s failed and continues to fail. This is an age demographic that grew up watching their parents struggle through the 2008 collapse, or for those who are in their 30s they graduated college only to find no job prospects. So those of us under the age of 40 face no healthcare, have no hope of social security when we reach retirement, have jobs that pay us below what we’re worth, and face a lower standard of living (comparatively speaking) than our parents did. So yeah, we’re a bit miffed.

But that also means that over the next 10-15 years, people my age and younger are going to become the majority voters. Statistics are showing that people in their 30s aren’t becoming more moderate, but rather are staying on the progressive side of economics. As we become the majority, politicians are going to have to adapt a populist economic message, but one that actually works. It’s very likely that in the next 10-15 years, the US will see steps made toward universal healthcare, better worker protections, and tax-payer backed public education. And while the younger generation is no where near perfect on race relations, we do tend to be ever-so-slightly better than previous generations, so we could potentially see an increase in cultural tolerance. But that one is always hard to predict. While that’s not immediate and the lack of immediacy is disheartening, and while no one can predict the future, the fact that people under the age of 40 are remaining consistent in their wants and desires from politicians is good.

So there is hope that things in the US will eventually get better. While I do believe we’re still watching the collapse of our republic, I think that if done correctly we could witness a political and economic revival in the US in the next 10-15 years. I’m not sure that’s the likeliest of outcomes as there are many other factors that could take us off that course, but one can hope, right?

Looking at the next economic recession and other joyful things

Ask anyone who pays attention to investing and the market how the market is performing so strong, especially with the uncertainty of Trump, and they’ll look at you and say, “I have no idea.” Because no one knows. Anyone who says they know is a liar. Uncertainty at the Executive level of leadership almost always triggers a decline and a panic. Instead, the market keeps going up and up. That, of course, means nothing for the actual economy (you know, your paycheck), but at least the rich are getting richer and we can take comfort in the fact that our labor is increasing their…I’m going to stop before I throw my computer against the wall.

The thing is, everyone knows a crash is coming and almost everyone is surprised it hasn’t happened yet. But no one knows when the crash is coming, so we have this optimistic nihilism in investing where everyone knows they’re going to lose their money at some point, but they’re optimistic that they can make more now than they’ll lose later. They think once they see the signs of collapse, they can take their losses for that day and cash out. Sure, they’ll lose the maximum amount of their wealth, but they’ll still have made a profit and should be able to weather the economic storm.

This strategy means investors and economists are looking for what will trigger the next collapse. Since we have short memories, we think it’ll come from some economic bubble so we’re constantly looking for bubbles. We had the tech bubbles in the late 90s and then the housing bubble in 2007-2008. So, naturally, everyone is looking for a bubble. But no true bubble exists, at least not one that could crash the economy. A bubble forms in a growing economy (which our economy is “growing” if you’re in the right economic bracket). Imagine a tar pit that’s expanding and a bubble begins to form on the top of the tar pit; eventually that bubble will burst. But the pit itself continues to grow and can recover. Bubbles aren’t fun and can harm an economy, but you can recover from them if you’re willing to marry yourself to Lord Maynard Keynes. My suspicion is that the next recession won’t stem from a bubble, but will be something far worse; the next recession will be structural, a part of the hard economy, meaning the economy itself is going to shrink.

Where will this potential shitstorm happen? Likely in construction and retail. I know, I’m so original because it’s not like anyone else has predicted the same thing. It’s not as though Wikipedia has a page dedicated to the Retail Apocalypse or anything. But still, it’s an issue that no one is really paying attention to and it’s a major crisis that we know is coming. It’s like knowing a category 5 hurricane is on its way and no one reports about it in the news and no one is evacuating. The only question is when all this will happen, but it’s likely to happen end of 2018 to beginning of 2019 (or at least see the beginning stages). Again, not original.

We know that billions of dollars in debt is about to come due next year. In fact, $1.9 billion will come due next year, with an industry average of $5 billion over the next 6 years. That may not seem like a huge deal, but consider that Toys-R-Us went bankrupt after it failed to restructure just $400 million of its $5 billion debt. That’s a pretty small amount of debt (relatively speaking) to restructure, but because there’s simply little to no cash flow at the retail level. Multiply this struggles across hundreds of billions of dollars in debt in the retail industry and we’re quickly lining up for a problem.

Consider that in 2006 many sub-prime mortgages began to hit maturity and so rates went up (most under the whole “Pick-A-Rate” model that multiple mortgage companies put into place; really, really, really stupid idea), which triggered the foreclosure crisis of 2007. In that crisis, 1% of the mortgages in the market defaulted and that’s what triggered the crisis. Add to it that retail banks exist in a world where they can’t really refinance because everyone is bearish on retail and we’re seeing the beginnings of a major storm.

The kicker here is that more than 1% of the retail outlets are in trouble and the loss exposure to banks is equal to the loss exposure from the financial crisis. 34% of the retail debt is owed by regional and local banks (small banks) and 15% is owned by national banks. If a Bank of America or Chase Bank takes a $1 billion loss due to the bankruptcy of some retail outlet, that’s a major loss, but they can still keep on going. If a regional bank takes that loss they’re likely to go under. With at least 25% of retail malls predicted to close by 2022 (that’s only 4 years) and at least $100 billion likely to be thrown into bankruptcy within the next two years (and that’s just from Sears Holding and Bon-Ton Stores), it’s difficult to imagine how banks will adjust to the sudden loss exposure.

Oh, but it gets better!

Retail represents approximately 9 million jobs in America. Now, being retail these are 9 million horrible, low-paying, no benefits, really shitty jobs…but they’re still jobs. Some of the largest retail companies, all of which have announced closures or are on the brink of bankruptcy, account for approximately 2 million jobs. By 2022, if figures are correct, we’re looking at a job loss of anywhere from 1-5 million low-paying jobs. The strain this will place on an already overburdened social service system will be enough to cause problems. The jobs lost in 2007 were middle class and the people had savings (meagre savings, but they had them), 401(k)s, and other assets they could leverage, not to mention they could at least get jobs in retail to offset some expenses. Retail employees have none of those provisions and typically live paycheck to one week before their next paycheck. They’re constantly broke and are considered “low skill” labor, so there literally are no other jobs for them to jump to. These are people who when they have no job will literally have nothing left. Tell me, historically, what happens when people have nothing left, no other options? What do they do? Typically they vote for extremist candidates (O hai Trump) or they happily create civil unrest.

Now everyone tries to be an optimist and say that Amazon and other online outlets will pick these people up, but that’s simply not true. Online outlets will need mostly warehouse people, and most current retail employees aren’t located anywhere near a warehouse. Likewise, most warehouses are looking at being automated within the next 5-10 years, so anyone who is lucky enough to get a job at a warehouse will likely find themselves out of a job all the same.

While it’s convenient to blame online shopping for all these problems – and certainly the rise of online shopping is a factor – the biggest factor has been the middleclass squeeze. As the middleclass disappears from the US, their spending power disappears too. The greed of corporations has created an ironic catch 22: They lower wages of laborers to attract shoppers with lower prices, often forgetting that laborers and shoppers are the same people. By cutting wages, they cut their own profits. Their greed and desire for the immediate gain, for profits that quarter, has led them to cut wages when wages didn’t need to be cut. The consequences are that we’re looking down the barrel of a major recession.

What, then, is to be done? If you’re already poor or living paycheck to paycheck or working retail, there’s not a lot that you can do. You don’t have enough money to save up to last through hard times, so there’s not a lot you can do to prepare for any collapse. The best you can do is to try and organize and put pressure on your Congress people. If you’re in a blue state or purple state, this might yield some fruit. A red state, not so much. The other thing is pay attention to primaries and vote in the primaries, vote for candidates that are committed to cutting the wealth gap and have a solution beyond, “Oh just work harder!” But we have to accept that we cannot hope for a better future, we’re going to have to take action and that’ll require organization, protests, marches, and voting whenever you can vote.

Another recession is on the way and it’s likely worse than the last one. There is no bailout that can fix it because forgiving the debt of these companies would only delay the inevitable. Until people can spend money, retail outlets – and all the other sub-industries that support them – will continue to suffer. The greed of the wealthy is without a doubt going to be the end of us.

Avoiding a Bolshevik Revolution: A How To Guide (Featuring Vladimir Solovyov)

Well it’s here, the 100 year anniversary of the Bolshevik Revolution (give or take a few days, I’m late…I have a real job you know). So it’s time to celebrate because there ain’t no party like the Communist Party! We’ll have plenty of food, unless you’re Ukrainian. Sorry.

For whatever reason, cos-playing Antifa kids want to party like it’s 1917 (forgetting the irony that Antifa is typically anarcho-communist, meaning it’s not exactly in line with Bolshevik ideals, but whatever) and overthrow the bourgeoisie. And who can blame them? In our modern age, at least in the United States, we’re seeing such a massive disparity in wealth that we can actually watch it destroy our economy, hopes, and dreams in real time. We’re seeing jobs disappear, the rise of an aristocratic class in America, and realizing that our counterparts around the industrialized and modern world tend to have much better, much easier lives. We feel hopeless to change all of this.

But don’t fret, because pre-revolution Russians felt REALLY similar (they actually felt worse)! So we got that in common. We can look to history to see how to prevent it from happening again. The easiest way to avoid a Bolshevik Revolution is to not dissolve the monarchy and put a highly divided, inept government in place while fighting a major land war against Germany, Austro-Hungary, Bulgaria, and the Ottoman Empire. Likewise, don’t free people from feudalism and have no plan on how to…

So yeah, the exact parallels don’t exactly match up. But if you look at some of the pre-Revolutionary philosophers, they saw the problem of the Revolution before it ever occurred. I don’t mean Lenin or Trotsky. I don’t even mean Bulgakov or, to a lesser extent, Florensky. Dostoevsky certainly punches the causes of the Revolution in the gut before it ever happened, but doesn’t spell it out. No, we must look to one of Dostoevsky’s good friends, The Philosopher himself (not you Aquinas, sit down), Vladimir Soloviev, or Solovyov, or whatever (I’m going with Solovyov).

Ah yes, Solovyov, of course, why not him? Who hasn’t read Solovyov? Well, pretty much everyone in the West hasn’t, so…

Vladimir Solovyov was a guy born destined to be a priest, moved toward Nihilism, then toward Catholicism, then back toward Orthodoxy. He was impressive enough that Dostoevsky based not one, but two characters in The Brothers Karamazov on him (Aloysha and Zosima; impressive when you consider Aloysha is named for Dostoevsky’s son who passed away with 3 years old, but still took on the characteristics of Solvoyov). He was a big believer in ecumenism founded on love and truth and a bigger believer in a government that was economically progressive and socially libertarian. Oh, and he is considered a heretic by many for his going too far with his teachings on the Divine Sophia. So close.

The thing is, Solovyov saw the Revolution coming and wrote about it in the 1880s. He saw that a great European war would strain the resources of Russia and cause the people to finally revolt, to revolt against a Church entrenched within an oppressive government, to revolt against a monarchy that had abused the people for centuries, to revolt against life itself. He saw that they’d establish a totalitarian regime based on modernism and that this regime would eventually collapse, years after the revolution (seriously, he predicted all of this; absurdly impressive and unfortunately the book is packed away right now so I can’t offer citations). And he saw that, way back in 1880, the Revolution could be stopped. Alas, no one listened to him.

His solutions, however, apply to more than Russia. His solutions are, in a typical Russian way, very vague, very specific, and very paradoxical. In many ways, they only apply to Russia at that specific time and place. But in other ways, they apply to all nations at all times (such as his maxim, and I’m paraphrasing here because, again, my books are packed away, “It is okay to love one’s country, but love other countries as much as you love your own”). Solovyov’s entire system in that it’s theological-philosophical, but can be adopted and embraced by anyone of any faith. You could boil his entire system down to one thing: Love. The entire economic and political system of Solovyov boils down to loving others. Seems simple enough, but it’s not.

See, to Solovyov, revolutions occur because people are treated like shit, but we’re not shit, we’re more than that. He throws off the notion that humans are basically good or basically evil and rather argues we have the capacity to be good and evil, but what matters is what we choose to be. The path to choosing good must begin with the belief that we have some purpose in life, something more than wasting oxygen in a cycle that will inevitably end billions of years from now. That purpose is to grow in love, which even the atheist who denies all purpose in life can embrace so long as he has a streak of existentialism within.

Growing in love means holding to a belief in the common good, or doing what is best for all. Not the greater good (the greatest amount of good for the greatest number of people), but the common good, looking out for everyone, even the assholes. But all of this is still vague, so let’s break down how we look out for the common good:

  1. Remember that human dignity actually exists. What that means is that every human being, whether obscenely wealthy or obscenely impoverished, holds value. No one holds any more intrinsic value than anyone else, which means that all legitimate concerns are valid (there are illegitimate concerns, but we won’t get into that).
  2. Remember that we’re a part of something greater. In recognizing individual human dignity, we must also recognize that we’re nothing without our community and our culture. Who we are as individuals is directly tied to and reliant upon who is around us. Thus, we are born with a debt and we die with a debt to a society that forms us how we are; if we are successful, we must remember those tools came from thousands of different people instilling lessons into us to make us into who we are. No one is raised by their own bootstraps, Obama’s “You didn’t build that” would fit every well within Solovyov’s works.
  3. Remember that because we have individual dignity and because we are nothing without the community, we must not elevate ourselves above the community. Selfishness, whether through petty robbery or through low wages to increase profit rob the community. It isolates us from the reality of our existence, which is what causes the economic anxiety and, on a deeper level, the existential angst, that deep desire for something other than our current life, so prevalent in our modern times.

The problem with Russia is that they ignored all of the above. They kept giving power to aristocrats, they ignored the workers, they ignored the pleas to depart from the war, they ignored the cries for fairer treatment. The Russian people cried out for dignity and were met with a very strong nyet, so the Russian people said, “Oh, okay then, well, how’s about a nice revolution?” And thus 1917.

And here we are, 100 years later in the United States, failing to learn from Russia’s mistake. Listen to modern debates over things that shouldn’t be so vitriolic, like healthcare or fair wages. We all understand, or should understand, that businesses do have to make a profit in order to stay open (this is true even in a Communist society; the profits are just shared among the workers or the community…or in the case of Soviet Russia, “shared” by a bureaucrat), that doctors need to make money to continue their practice and education, and that there has to be an exchange of goods that can at times be pricy. But we also need to understand that people need to, you know, live. That they too need to make a profit on their labor and not the bare minimum acceptable, that they need money for more than the necessities so they can enjoy leisure.

The problem in the modern age is we have two political parties that have seemingly forgotten (or, let’s be honest, never knew about) Solovyov’s core principles. We’re currently attempting to pass tax legislation that not only denies the existence of human dignity, it straight up lights the concept with fire and pisses on it to put it out. We tell the poor to work harder, ignoring that the system is set up to harm those who are poor despite their hard work. The wealthy, especially with the latest GOP tax bill, puts petty charges in there to jab at the poor, as a reminder to them that they are poor and therefore lesser. Their dignity doesn’t matter as much as someone who is wealthy because we have this stupid myth that being wealthy means you’ve actually earned your wealth without anyone’s help at all.

So when the poor in the US have had too much, when they can’t stand to be insulted and have their dignity robbed from them by working 7 days a week between two jobs only to still live paycheck to paycheck, when they grow tired of watching their children suffer from preventable diseases, when they realize that they’re being scammed by the ruling elite in the US, and then they decide to elect a strongman leftist, an open and avowed Socialist who comes with all the centralized socialism you could ever want, they can look back in sorrow on Solovyov as he tamps out his pipe, smiles, and says, “Told you so sukas.” (He probably wouldn’t say that). If you want to avoid a revolution here in the US – not an armed revolution, but one at the polls – then you should probably start treating everyone with dignity and class, which means we’re going to have to reform our entire economic system. Good luck with that.